Is the Price of Games Dropping?

Kris Erickson • Dec 24, 2008 • Comments (1)

It has gotten ridiculous around here. At a busy shopping center in Madrid the other day I found myself perusing the isles looking for Christmas gifts for relatives. Traditionally, this is a painful time for my wallet, especially since I am paid in American dollars and gifts in Spain are priced in Euros. This year, however, I have been pleased to find that most items – from clothing, to housewares, to flat screen TVs – have been heavily discounted. In fact, now I won’t even look at an item unless it has one of those ubiquitous “30% off” tags next to it. All over the world, retailers are slashing prices to get rid of stock in the middle of the biggest economic recession since the 1930s. So, why hasn’t the price of video games gone down? In many places we still see games with those wallet-hurting next-gen price tags of $59 and even $69. In Europe, where we are traditionally used to being bent over by electronics retailers, you can simply add a euro sign in front of those numbers.

However, some signs suggest that games are in fact, getting cheaper. When Lionhead and Microsoft slashed the price of Fable 2 only weeks after its release, journalists rushed to Peter Molyneux for his reaction (which was basically, “meh”). Activision Blizzard have recently knocked $10 off of the price of Call of Duty World at War, another AAA title that was expected to be a strong seller this holiday. These discounts are bringing games more in line with what we were used to paying for them last generation, before things got totally out of hand. Fable 2 now sells for $29.99 and World at War goes for $49.99.

Will this trend spread to other game publishers, and more importantly, will it last into the new year? Lazard Capital senior analyst Colin Sebastian thinks this pricing will continue into the new year, cutting into publisher profits. “While the move may be part of an annual promotion, we believe a USD $10 discount on one of the industry’s top holiday releases highlights the risk of lower software pricing moving into the New Year,” he wrote in a recent report to investors.

Whatever the reason for the price cuts, consumers of video game software are definitely starting to see some deals over the holidays. And thanks to aggressive price cutting by Microsoft and Activision, I know what games my relatives are getting this Christmas.